Resilience will be tested in year of tough challenges
David Perry, Executive Editor -- Furniture Today, January 7, 2007
There are plenty of smart marketers in the bedding industry. Collectively, they are almost impossible to beat. That's one of our guiding principles as we compile forecasts and predictions for business in the new year.
With the insights of over two dozen top bedding executives in hand, we believe we've been able to identify all the key factors that will come into play this year.
What we can't do is predict exactly how they will all play out. In several cases, conflicting forces will be at work. Perhaps the biggest battle this year will be the resilience of the bedding category versus a tough business climate. Something has to give in that contest.
At this point, many leading bedding executives see their category losing that battle, with some predicting unit declines for bedding this year. In our book, that will make for a down year, although dollars will almost certainly be in positive territory.
This revives the long-running debate about whether we should be focusing on units or dollars. We see unit figures as an indication of real growth, or real decline. While it's true that you take dollars, not units, to the bank, it's also true that factories need good unit performance to generate profits.
Dollar growth almost always outstrips unit growth, due to several factors, including price increases and the industry's continuing ability to sell better bedding. There have never been more high-end beds on the market, and they will do their part to create a strong selling umbrella.
Also contributing to dollar growth this year will be the onset of a national fire-resistant mattress standard. Exactly how much that will raise prices is debated, with estimates ranging from $50 to $100 per queen mattress at retail. The standard goes into effect on July 1. New FR beds will be rolling out in broad distribution starting in the second quarter, it appears.
The new FR standard means a price increase for much of the industry. And that brings up another issue to watch in 2007: Will higher prices hurt demand? Answers to that question vary. Some say higher prices will depress demand at lower price points. But others think the industry has an opportunity, with all those new bedding lines coming on the market, to tout those new lines to consumers.
We agree with that second school of thought. We can't imagine why the industry would not take advantage of a round of new bedding to do plenty of promoting. This is not a time for retailers to sit on their hands and bemoan a tough business climate. Nor is it a time for manufacturers to hunker down and wait for sunnier skies in 2008.
Collectively, let's turn the hand that we're dealt into a winner. Let's make the most of a challenging year.
Contact David Perry at dperry@reedbusiness.com
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